Clients show preference for contractors over permanent staff

Despite the current downturn, some recruitment agencies have reported an increase in billings from contract staff over the last month. They have attributed this to 'the rise in clients' preference for temporary workers over permanent staff in the face of economic uncertainty,' according to the Recruitment and Employment Confederation's (REC) latest Report on Jobs.

The monthly REC jobs report has otherwise continued to show subdued growth in the contracting sector for September. It also reports the sharpest rate of decline in permanent staff placements since the survey began in October 1997.

Recruitment agencies continued to report weaker demand for contract IT staff where demand fell for the seventh consecutive month and at the fastest rate in the series' four-year history. Growth of average weekly billings from contract staff was well down on that seen at the start of the year.

Growth of average hourly rates for contract staff was also reported to have eased further in September. The rate of increase was the weakest since March 1999 and continued to point to a substantial easing in upward pay pressures from the peak seen in the middle of 2000. Slower growth of temporary pay during the month was generally linked by consultancies to fewer skill shortages and the recent weak growth of demand for temporary and contract staff.

Margins on temporary and contract staff also deteriorated for the fifth successive month in September. Nevertheless, the rate of decline eased marginally compared to August.

Demand for IT contractors ranked eighth in eight other sectors at 35.4 per cent, whereas last September IT ranked seventh, with demand at 60.8 per cent. Key skills reported to be in short supply were: Website Designers.

Permanent staff in IT and Computing sector also ranked in eighth place with demand at 37.9 per cent. This time last year IT ranked in second place with demand at 69.8 per cent. Key permanent staff skills reported to be in short supply in IT & Computing were listed in the report as being 'All qualified staff.'

According to Jobstats the average hourly IT contract rate quoted is £26 per hour. The average annual rate quoted is £37,100 per annum.

Demand remains low

The top 5 Skills (by number of adverts referring to them) are:

Support, 19.7 per cent - Average rates: £21 per hour/ £33,800 per annum

Unix, 15.3 per cent - Average rates: £34 per hour/ £38,800 per annum

Design, 17 per cent - Average rates: £35 per hour/ £38,500 per annum

Management, 15.4 per cent - Average rates: £36 per hour/ £41,900 per annum

NT, 12.2 per cent - Average rates: £19 per hour/ £33,000 per annum

(Note: Hourly rates refer to contract positions, annual rates to permanent)

The top 5 Locations (by number of adverts referring to them) are:

London 19.7 per cent - Average rates: £36 per hour/ £43,300 per annum

Berkshire 6.2 per cent - Average rates: £28 per hour/ £39,500 per annum

City 5.1 per cent - Average rates: £43 per hour/ £47,300 per annum

Surrey 4.9 per cent - Average rates: £17 per hour/ £38,400 per annum

Hampshire 3.4 per cent - Average rates: £24 per hour/ £36,100 per annum

Nick Wells from Jobstats commented: "There has been a noticeable fall in permanent IT workers' salaries by about 4 - 5 per cent, which is not something I've seen before. The median rate has also fallen by 2-3 per cent in the top end of permanent positions relating to the IT sector. I expect a similar sort of picture next week, with a further reduction in rates."

Andrew Parker, Chief Executive of the IT & Telecoms recruitment agency, White & Nunn, said: "The downturn continues to be a major concern and suppliers are working increasingly harder to give added value service and to support areas that are still maintaining their position."

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Richard Powell, UKTECH